Mumbai:
Indian insurers look set to withstand an economic downturn exacerbated by the coronavirus pandemic, with general insurance premium growth remaining in positive territory thanks to persistently strong sales of health and protection cover, said international rating agency Moody's on Wednesday…
“Resilient sales of health and protection policies reflects rising consumer awareness of these products during the coronavirus pandemic, as well regulator's actions enabling insurers to offer protection against the virus. Indian insurers have also rapidly developed their digital offering during the pandemic.Over the longer term we expect the industry to benefit as the government injects capital into publicly owned insurers, and as private insurers reinforce their solvency through a combination of capital raising and M&A,'' said Moody's analysis on Indian insurance sector..
These steps will over time reinforce Indian insurers’ credit strength. They will also add transparency and foster improvements in these insurers’ risk management and governance standards, said Moody's .
“We expect general insurance premium growth to remain in positive territory.Persistently strong demand for health and protection coverage will support general and life insurance premiums. Health premiums rose 13.7% in the fiscal nine months to December 2020 (9M FY 2020), supporting general insurance premium growth.Indian insurers have also responded to the crisis by rapidly developing their digital offering. These factors have enabled insurers to meet their clients' needs and have therefore supported sales of health and protection policies,'' said Moody's
Mood's expects India’s real GDP to contract by 10.6% in the year starting April 2020 compared with 4.2% growth in fiscal 2019 ), with the coronavirus pandemic exacerbating a preexisting economic slowdown.This has had an adverse impact on the Indian insurance industry’s premiums.
However, sustained strong demand for health and protection cover has slowed the decline. Health premiums rose 13.7% in the fiscal nine months to December 2020 (9M FY 2020), largely in-line with the 13.4% growth in fiscal 2019, this helped support the overall general insurance premium growth rate.
“We expect premium growth to accelerate further as India's middle class expands, and as the industry upgrades its distribution channels and makes better use of technology.Regulatory guidance and digitalisation enables growth The Insurance Regulatory and Development Authority of India (IRDAI) has been keen to ensure that insurers are meeting consumers' needs. The regulator has continued to issue guidance, circulars and regulations encouraging the industry to cater to changing policyholder demand,'' explained Moody's. .
During the nine months to December 2020 (9M FY 2020) premium growth slowed to 2.5% in general insurance, while life insurance new business premiums fell by 1.7%. This compares with growth of 11.7% and 20.6% for general and life insurance premiums respectively in fiscal 2019 (year ended March 2020.
Persistently strong sales of health insurance reflect rising consumer awareness of the product as a result of the coronavirus pandemic, combined with insurers' efforts to develop their digital sales channels.The IRDAI has also made it easier for insurers to digitalise, allowing them to meet consumers needs as seamlessly as possible during the pandemic Indian insurers have also responded to the crisis by rapidly developing appropriate products and improving their digital offering. This has already lead to an increase in sales of health and protection policies, and we expect it to drive further growth in future, said Moody's .
“We expect health premiums to continue growing strongly into 2021, when we anticipate that India's GDP growth will rebound to 10.8%, leading to a gradual normalisation of economic activity.
India's low rate of insurance penetration (premiums as a percentage of GDP) indicates that there is ample scope for continued premium growth.'' said Moody's .